Interesting article about a PDL company getting fined big $$

The Washington State Department of Financial Institutions fined Advance Til Payday and Zippy Cash for making more than 400 loans in excess of $700 to consumers. DFI article after the jump.

Payday Lenders Slapped With Over $1.2 Million in Fines Following DFI Investigation

Zippy Cash & Advance Til Payday Facing Industry Ban and Paying Consumer Restitution

OLYMPIA, WA – In the state’s largest payday lending enforcement action, the Department of Financial Institutions (DFI) filed charges against payday lenders, Advance Til Payday and Zippy Cash. Among the numerous allegations of misconduct, the payday lenders made over 400 loans in excess of the state’s $700 maximum loan limit. DFI intends to revoke both companies’ licenses, ban the individuals from doing business in Washington State, impose fines, order restitution, and charge for the cost of the investigations. The companies may request a hearing to defend the charges.

“We will not tolerate payday lenders harming consumers by overstepping the legal limitations set by the legislature,” said Deb Bortner, Acting Director of DFI’s Division of Consumer Services. “DFI will continue working diligently to investigate consumer complaints and discipline violators of Washington’s payday lending laws.”

Though the two companies represented themselves as two separately owned entities, the department uncovered evidence that Advance Til Payday and Zippy Cash have common ownership. Loren C. Gill, President and owner of WCS Loans, Inc. d/b/a Advance Til Payday (Advance Til Payday), and Daniel M Van Gasken, Managing Member and Executive Trustee of Zippy Cash, LLC d/b/a Zippy Cash and d/b/a Advance Til Payday (Zippy Cash), are named in the charges. Documents showed that Van Gasken acquired ownership interest in WSC Loans, Inc., but failed to notify DFI of the change.

The department examined store locations of both payday lenders in Puyallup, Tacoma, Olympia, and Lacey. It was discovered that numerous borrowers simultaneously received loans from multiple branches of both stores.

Example:
A borrower visits the Puyallup branch of Advance Til Payday to borrow $700. That same day, the borrower takes out a $700 loan at an Advance Til Payday branch in Tacoma.

In addition, the borrower drives south to receive another $700 loan from the Advance Til Payday Olympia branch. The total payday loan amount for this customer in one day is $2,100.

With this practice, Zippy Cash allegedly made individual loans as high $2,100. Advance Til Payday made loans as high as $3,450. DFI found over 200 loan transactions involving 15 borrowers showing evidence of cross-loaning.

The examination also uncovered that at the time Mr. Gill applied for a license, he did not disclose an administrative action by Virginia’s Attorney General permanently banning him from the small loans business in 1993. In addition, Mr. Gill failed to notify the department of an assault conviction in Pierce County Superior Court on July 14, 2005.

DFI ordered both companies to stop making loans that exceed the legal limit. The department intends to revoke both licenses to offer payday loans in Washington State and ban Daniel Van Gasken and Loren Gill from the industry for five years. Zippy Cash was fined $471,600 and Advance Til Payday, $557,800. DFI will require the companies to review their records and return loan fees to consumers who received loans in excess of $700. The total amount of restitution will be determined later, however, Zippy Cash will pay at least $21,000 in restitution to consumers named in the order. Advance Til Payday will pay at least $18,000 in restitution to consumers named in the order. In addition, the companies must pay a combined total of $21,000 for the cost of the investigation.

Advance Til Payday has 27 stores licensed to do business in the State of Washington. Zippy Cash has six stores licensed in the State of Washington.

Statement of Charges
To view copies of the Statements of Charges, visit DFI’s website at: http://www.dfi.wa.gov/cs/adminactions_2007.htm

What is a payday loan?
A payday loan is a small, unsecured, high interest, short-term cash loan. In most cases, consumers write a post-dated, personal check for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it, or the customer returns with cash to reclaim the check.

What is allowed in Washington State?
Payday Lending Limits
Maximum Loan Term: 45 days
Maximum Loan Amount: $700
Maximum Fee: 15% on the first $500
10% above $500

Example:
A loan for $500 + $75 fee = $575
A loan for $700 + $95 fee = $795

Under the Truth in Lending Act, the cost of credit must be disclosed. Among other information, consumers must receive information outlining the finance charge and the annual percentage rate (APR). The APR informs of the cost of the loan. For example, a 14-day, $500 payday loan with the maximum fee permitted by statute would have an APR of 391.07%.

Washington State Department of Financial Institutions
www.dfi.wa.gov • (360) 902-8700 • (877) 746-4334
Scott Jarvis was appointed the director of the Washington State Department of Financial Institutions in March 2005. The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud.

DFI’s website features a section devoted to consumer information - including education about payday loans. Visitors can view a list of payday lenders licensed to do business in the State of Washington, and listen to recordings of DFI’s Spanish and English payday lending public service announcements.